British lender Tesco Bank has announced plans to exit mortgage lending business citing challenging market conditions.
In a statement, the bank said that it has ceased new mortgage lending and seeks to divest its existing portfolio.
The planned divestment will include the transfer of related balances and the ongoing administration of relevant accounts.
Tesco Bank chief executive Gerry Mallon said: “In recent years, challenging market conditions have limited profitable growth opportunities.
“Our focus is on how we best serve Tesco customers and align our resources effectively to their needs while ensuring that our offer remains sustainable in the long term.”
Tesco Bank mortgage business
Currently, Tesco has more than 23,000 mortgage customers with total lending balances of £3.7bn.
The move comes at a time when several smaller mortgage lenders have complained about shrinking profits in the recent years. The profits were said to be affected due to new regulations and presence of bigger rivals.
However, the company did not disclose the financial terms on which the business might be transacted.
Tesco Bank also added there will be no immediate changes to customer accounts due to the announcement.
The bank will notify its customers after the transaction is confirmed.
Tesco Bank is a wholly-owned subsidiary of British retailer Tesco. It commenced operations in 1997 and currently boasts of a customer base of 5.6 million.
The Tesco Bank mortgage business was launched in 2012.